Headquarters

Imagine that a child was given school homework, to make a PowerPoint slide of Mum’s journey to and from work. It may look like this: https://app.box.com/s/w19otbry4gt53m3zfs3q – hopefully not too much better, as I’ve just done that with basic clipart!

Now, imagine how much of that picture might make little sense to a school-child in 2040 (or, thereabouts). Or at least, I truly hope that it would not be a ‘normal’ daily journey. It might make a fairly interesting educational boardgame actually? Roll a pair of sixes, to work from home. Dash it, I rolled two ones – have to catch that crowded commuter train again….any entrepreneurs out there, call me!

Transport infrastructure is a political hot-potato, probably in any city or densely populated region. But, one has to ask the question, is infrastructure the right way to spend our way to a better future? Politicians seem to think so. Look at our ‘boardgame’ though, and it would be immediately obvious to a child that there are many options other than travelling the winding route all the way to the corporate office.

My regional partner in Australia, Martin Leitch, was telling me about his home city of Melbourne on our regular call last week. Aparently it is currently expanding faster than Sydney. This is creating a serious issue with travel into the CBD, and the politicians (like everywhere) seem to believe that throwing money at transport infrastructure is the solution. So, we got discussing whether they should redefine infrastructure as a wider support for working in a different way. That infrastructure should include places, spaces and technology which allows people to do their work without travelling too far from where they live. Just like our boardgame picture – walking to a ‘desk’ in a coffee shop, or using the beleaguered Main Street which has been starved of customers since the advent of out-of-town shopping centres. Or perhaps even travelling to the railway hub, but not boarding any train! Why not – lots of parking and buses, so why not have a ‘work-hub’ at every rail hub?

It is all about city, urban, suburban, and rural planning. Land economics – what is the best economic use of land. The cost to live in the centre of cities, even if one wanted to, is always going to be too high for most families. The cool CBD is for the young professionals, singles, affluent couples without children, and a few ’empty-nesters’. Unless you are very wealthy, the rest of us need to commute to an office from various distances away from the centre. That daily grind seems to get more expensive, and stressful (due to many factors – overcrowding, delays, etc.).

It is also not sustainable, in the human or environmental sense. Carbon has had a price now for many years, due to schemes such as the EU Emissions Trading Scheme. And that carbon ‘price’ will only rise over time. Add that to the actual ‘real’ fuel cost of travel, commuting will become a balance between necessity and affordability. It will be reduced, and ‘rationed’ in effect, to the one or two days a week that a person actually needs to be ‘co-located’ with the rest of their team in order to stay sufficiently ‘in touch’. But, commuting five days a week over long distances will surely be deemed wasteful, and environmentally damaging – not to mention costly and inefficient.

Then, there are the social pressures on families, especially – childcare, and elderly or carer responsibilities. It would be far easier, for many working people who also have carer responsibilities, to be able to get home in a shorter amount of time. There is no time to expand on that here, but there is extensive literature available on flexible working, and many governments are supporting with legislation.

In our little real estate world, who should be interested in all this? Real estate economists and developers, for sure – what they develop, and specifically where, needs to change. There will not be the demand for tertiary office space, especially older and inflexible property stock. Occupiers will need less space in the corporate ‘head office’, but what they do need will be good quality, highly flexible, in attractive locations where people can easily access transport links.

They will invest in fewer, smaller, high-spec ‘hubs’ in key cities – and they can spend a little of what they have saved on attracting and retaining staff, by giving them some form of flexible workspace ‘clubcard’ to access a facility closer to home.

Aha, the lamp lights – what will these ‘local centres’ look like? Well they may look like the existing small town Main Streets, retail centres, and rail hubs as mentioned above. Most of the buildings that we will be using in 2040, of course, already exist – we only add a little to the ‘stock’ every year. But those existing buildings can be redesigned, and refurbished of course (developers eyes light up too, now). Property development opportunities. Also the creation of a new service economy, aimed at making peoples’ working day more effective – and attracting them to their ‘local centre’. It will have to be high quality though – if you have worked in central city locations for years, and now you are contemplating working 2-3 days a week in your local hub, it can’t feel like second-class experience. But, if we get the quality of facility and experience right, people will come – they will not mourn the loss of their daily commute into the corporate office. After all, they will still commute once or twice a week, to stay in touch, socialize, meet clients, or for many other reasons. And if commuting is not a daily grind, it may become a welcome trip to see friends. Absence makes the heart grow fonder!

So, perhaps the question should have been, not ‘what’ was, but ‘why’ did we commute Grandma? That one, I’ll leave to you to ponder!

This article in GlobeSt.com caught my eye: “C & W brings Merck Headquarters to Market“. It might well have read “brings HQ to life”, as if it was a dying old mammal! The article’s author, Antoinette Martin, describes the leviathan one-million square-feet HQ as:

“another of the big-footed “suburban dinosaurs” emerging on to the commercial office market in New Jersey”.

I once spent a week in one of these weird space-stations that never took off to ‘boldly go…’ Far from being excited by being in a foreign country, and experiencing the culture, I was neither! Much like a free-range chicken going on vacation to a battery-hen farm, I was bored rigid. Much later, the term ‘cube-farm’ was coined by somebody, and such places have been mocked by Dilbert. The concept of mixed-use development was entirely missing – staying in a nearby hotel, there was nothing to do, and nowhere to go. It was not a ‘human’ place.

People just don’t want these places – corporations might like the efficiency, but ‘people’ don’t. And corporations are full of people! But, there is good news for the next generation……

Antoinette Martin notes that developers and planners have learned to become creative about re-use of such unique spaces, however, quotes Andrew Merin, a vice-chairman of C&W.

“Every major corporate campus in New Jersey [USA] over the past three decades has either been re-purposed to meet the needs of a growing corporation’s new headquarters or positioned for innovative reuse”

The NAIOP in New Jersey [USA] discussed this issue: Panel of Experts Offers Solutions for Re-Imagining Suburban Offices

The title of NAIOP New Jersey’s March chapter meeting was “Dinosaurs or Diamonds? Re-Imagining New Jersey’s Suburban Office Spaces”. The link above talks of the “preference by a new generation to work in amenity-driven urban settings”. The discussion followed from a report (one of a series of Rutgers Regional Reports) by the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, titled ‘Reinventing the New Jersey Economy,’ issued at the end of 2012.

In a presentation prior to the panel discussion, Dr James Hughes, co-author of the report, said “By 2007, a new era dawned, with iPads, tablets and iPhones unshackling workers, who were no longer geography- or cubicle-tied”. Clearly, commercial real estate provision has a lengthy ‘lag’ behind demand. But people don’t want to work in these million sq.ft. suburban dinosaurs any longer. The offspring of the baby boomers, “are tech-savvy and like urban settings,” Hughes said. “The suburban corridors won’t necessarily be gone, but times have changed.”

From suburban dinosaur to new “town centre” – a more human urban setting

The developer of an even larger site, the two million-square-foot, 472-acre former Bell Labs complex in Holmdel, N.J., which successor Alcatel Lucent vacated in 2007, discussed their plans. Somerset Development “will be making improvements to recreate it as a town centre”. The Bell Labs complex will include a mix of residences, including affordable housing, both inside and outside of the main building. The building’s signature 70-foot tall atrium will re-emerge as a pedestrian promenade. The heart of the project will be its retail component, anchored by a 65,000-square-foot supermarket. Other components will include a 400,000-square-foot medical facility encompassing a health and wellness center, surgery centre, and an assisted living centre. Finally, a hotel and conference centre, and educational facilities, will round out the rebirth of the historic Bell Labs complex.

The PR article gives several more examples of “re-positioning” these large ex-corporate Headquarters facilities.

The dinosaur becomes agile, and avoids extinction

Yes, this is a well-disguised story about agile working! And social changes that go around, and in between. Ten years ago, most people did not have fast and reliable technology to enable them to work wherever they liked. Now that most knowledge workers do have this technology, they have started to change their whole day! They can work from home, so they don’t see the point (or like the cost, and environmental impact) of commuting too far. If the employer wants to see them in the office, at least a few times a week, they had better make it easy to get to.

Even better…offer someone a job….and availability of a flat/condo just a 5-minute walk away….oh, and a couple of restaurants, a gym, a nursery. Its also near the rail-hub to get into the city on Friday night, or for the weekend.

Your HR Chief will, at some point, realize that this set-up is an attractive part of the employment proposition – it may attract, and even retain, many employees. They may even trade-off a slightly lower salary. Shareholders will like that!…and, the heart of the old suburban dinosaur will be beating again. The same old corporate profit motive, but just quite a lot more pleasant to live around, maybe….